Sistema after Chavez

It’s one of the most unexpected sights in Caracas: the modern cable car rising out of the concrete jungle to the heights of the St Agustin barrio. It is a bold, ambitious venture in the sprawling, hilly Venezuelan capital to build a physical and psychological connection between the planned city and the topographic and social isolation of the slums.

As a public transportation project, the Teleférico might be considered symbolic of the late Hugo Chavez’s policies towards the poor and dispossessed in Venezuela. Modeled on a similar initiative in Medellin, Colombia, the cable car is one approach to the pressing problem of physical access to these communities. It is also an extremely expensive one, at an estimated cost of $270 million USD for the short stretch it currently serves.

This is the nature of the Chavez approach to domestic policy. Love Chavez or hate him, there’s no question that during his fourteen years as president of Venezuela, some of the poor benefited. The relative improvement is most concretely expressed in the Gini coefficient, a measure of income inequality in which a score of zero represent perfect income distribution. Since Chavez took power, this number has dropped to 0.39, making Venezuela the most equitable nation in South America and placing it virtually on par with the US.

But just like the cable car, at what cost was this improvement achieved? Look beyond the security destabilization to the direct and indirect economic expenses, and the picture might actually be even more troubling. Rampant inflation, capital flight, and currency devaluations all speak to failing trade and fiscal policies. The arbitrary nationalization of industries has invited corruption and waste while undermining foreign investment. Venezuela continues to subsidize gas down to a domestic pump price of mere pennies (a program benefitting only those wealthy enough to own a vehicle), and its diplomatic strategy of making oil available at discount rates to friendly nations such as Cuba, or giving it away entirely to low income households in unfriendly nations such as the US, has compelled the oil-rich nation to start importing fuel at full market prices to meet domestic demand.

This petroleum policy is the equivalent of borrowing money for the sole purposes of giving it away. As a practice it guarantees popularity (Chavez was re-elected with an 11 percentage point margin over his strongest challenger yet, Henrique Capriles) but is wholly unsustainable, and this more than anything else will ultimately have the greatest impact on the activities on el Sistema. The annual budget of the Fundamusical Bolívar is allocated in US dollars, and it has the relative safety cushion of foreign denomination loans for capital projects, but it remains almost entirely dependent on the Venezuelan government for funding its program activities.

Is there danger of a reduction in said funding? In the short term, the answer is probably no. Chavez’s designated successor, Nicolas Maduro, will necessarily campaign for election on an identical if not amplified platform; holding the endorsement but lacking the charisma of el comandante he may be compelled to out-Herod Herod to show his devotion to the ideals of the Revolución Bolivariana. One of Chavez’s last acts was to formally install Eduardo Mendez as the Executive Director of the Fundación (Not Jesse Chacón, as erroneously reported by British gossip-columnist Norman Lebrecht) so at least leadership continuity for el Sistema has been assured.

Long term the prognosis is much more troubling. The recent currency devaluation, Chavez’s parting gift to help the government balance its books, made everything from beyond the Venezuelan borders, such as musical instruments and plane tickets, fifty percent more expensive overnight. The mounting government debts, public dependence on subsidized goods and services, and volatility in the petroleum market are key ingredients in a toxic stew that will only foment even higher levels of social unrest and crime when the inevitable fiscal correction comes. Difficult choices will have to be made – choices that are already being made in the northern Americas. Infrastructure or Health care? Social services or low-income housing? Or worse – Music or Math? Most of these aren’t just Devil’s Bargains, they are Mazlow’s, and it’s easy enough to see the outcomes when viewed through his lens.

Doubtlessly some will take umbrage at the sight of Gustavo Dudamel first and foremost among the young honour guard at Chavez’s funeral, or the youthful musicians in their unmistakable jackets performing at the commemorative ceremonies, but to fixate on the optics of a compulsory relationship is to miss the point. Chavez’s fiscal legacy is far clearer than his social or political bequests to the nation: Sistema has outlasted its eighth political administration and is now into its ninth with Maduro’s interim tenure, however constitutional the latter may be. The question is whether the Fundación will remain unscathed through to an eleventh or twelfth.

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4 thoughts on “Sistema after Chavez”

Nothing is certain in this world excepting death and taxes, as the hacknied saying goes. However, El Sistema in the form of the Fundacion is more that capable of withstanding the wild political circumstances in which Venezuela now finds itself. I don’t agree with your “music or math” point.. That may be an issue in America or Australia, but it isn’t relevant in Venezuela, the funding coming as it does from Health and Welfare budgets. With those, it enables Venezuela to stand tall as a social and cultural symbol of what the poor can do- beat the rich and famous of Europe and America at their own game – culturally and politically.
It will survive and grow, I predict, at least as a legacy of Hugo Chavez, even though it started long before his reign…

It’s not a question of which department the funding comes from, but how solvent the government itself is. Sistema will survive, but I wonder how sustainable its current levels of funding are given the emerging economic situation. A downward drop in the price of oil could have major consequences for the nation.

True enough. I suspect however, that flagship social programs such as this won’t be shelved. And… there’s the Abreu Factor, which I note you have studiously avoided. That wonderful man will find a way. Es la verdad…